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Google Achieves Behavioral Targeting Nirvana

Imagine a world where advertisers would be able to predict your detailed behavior online. They would know when you are about to buy a song, a car, a present for your spouse – they would know virtually everything you are thinking.

If you believe this is impossible then you would be wrong as there are a few companies who have access to enough Internet data to make this privacy lover’s nightmare a reality and believe it or not a relatively new science called behavioral targeting is taking the online advertising world by storm.

In an March 2007 article in Business 2.0 titled The Quest For The Perfect Online Ad, the author points out that Yahoo is one of the leading companies in the behavioral targeting space. A candid interview with Yahoo’s Dr. Usama Fayyad the company’s Executive Vice President of Research & Strategic Data Solutions shows Fayyad thinks showing ads based on behavioral targeting is much more powerful than simply showing ads based on simple search queries.

A salient quote from Fayyad in fact is “I know more about your intent than any 1,000 keywords you could type.

Yahoo has 12 terabytes of user data flowing through it everyday and to put this in perspective, this amount represents more data than the entire Library of Congress! Fayyad proudly says he can predict with 75% certainty which of the 300,000 monthly visitors to Yahoo! Autos will purchase a new car within the next three months.

In addition Fayyad points out there are times when advertising works best out of context. In other words once the computer knows what your intentions are… Let’s say trading stocks -- it can display a highly effective ad for a trading company while you are tracking your fantasy football team.

But Yahoo is not the only company with massive amounts of users and data… Google too is in the position of tracking their customer’s behavior in Gmail, search, Froogle and a cornucopia of other sites which have chosen to run Google Adsense ads.

In addition Google has an extremely popular search toolbar installed on millions of computers allowing the company to keep track of what users do on a variety of sites.

Last week however the game of behavioral targeting got even more competitive as Google announced they are purchasing DoubleClick (News - Alert).

DoubleClick is the leading company in the business of displaying advertising online. Large web publishers often use DoubleClick as a way to track advertising on their own sites. For example DoubleClick could be set to allow an advertisement – let’s say a banner ad at the top of TMCnet to be displayed every 5th time the page is displayed. In addition the ad could be shown only on nights and/or weekends or to European visitors.

DoubleClick like many websites uses cookies which are files placed on user’s computers to track their browsing history.

With the acquisition of DoubleClick, Google now has access to the cookies and subsequently browsing history of vast numbers of web users. It would be fair to say that greater than 85% of Internet users frequently come into contact with ads served by DoubleClick. In addition there are a vast number of sites serving up Google’s ads and running Google Analytics. Google perhaps now has access to the behavioral information of over 90% of web users.

One can expect Google to start mining DoubleClick’s databases immediately and in the process, cross reference this data with its own vast databases of search history and perhaps even Gmail content.

The point is, Google now has access to not only it’s own army of sites but it also owns much of the browsing history of sites like Yahoo and MSN. In other words the competitive advantage Yahoo was recently touting could fade away rather quickly if Google not only knows what Yahoo! knows but much, much more.

I had a chance to interviewTim Vanderhook, CEO and founder of Specific Media about the Google/DoubleClick merger. Tim’s company specializes in behavioral targeting of advertising via its own advertising network.

Vanderhook believes this merger is partially fueled by Google’s concern about the limited value of text-based search ads and moreover he expects Google to perhaps provide some paid DoubleClick services for free.

Tim raises an alarm bell when he says, “This acquisition is not plug-and-play for Google like Advertising.com was for AOL (News - Alert). They are attempting to get into the market by purchasing an ad serving technology, they still need to forge relationships with major publishers on the display side of the business to get inventory to resell.” He continues, “This strategy will prove to be an uphill battle and for $3.1 billion in cash that hill just got a lot bigger.”

Tim sees this purchase as challenging Google’s “Don’t be evil” mantra. And he may have a point. The firestorm ignited by privacy advocates over Google’s Gmail program where the search engine giant decided to show ads related to e-mail content could be dwarfed by the concern over the vast quantity of data Google now owns.

Google could potentially have access to not only the majority of the world’s search history but its browsing and e-commerce history as well. The company could know more about web surfers than they know about themselves.

While this is a nightmare scenario for privacy advocates everywhere, it should scare Google’s competition even more. After all, it will be difficult for any other company to challenge the vast warehouse of user data Google now owns.

If applied correctly, Google becomes the ultimate behavioral targeting advertising engine and in the long run Google shareholder’s behavior could be easiest of all to predict… Big smiling faces and a 75% likelihood to be purchasing a shiny new car in the next three months. :-)

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